Correlation Between EMS CHEMIE and St Galler
Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and St Galler at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EMS CHEMIE and St Galler into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMS CHEMIE HOLDING AG and St Galler Kantonalbank, you can compare the effects of market volatilities on EMS CHEMIE and St Galler and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EMS CHEMIE with a short position of St Galler. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and St Galler.
Diversification Opportunities for EMS CHEMIE and St Galler
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMS and SGKN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler Kantonalbank and EMS CHEMIE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EMS CHEMIE HOLDING AG are associated (or correlated) with St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and St Galler go up and down completely randomly.
Pair Corralation between EMS CHEMIE and St Galler
Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to under-perform the St Galler. In addition to that, EMS CHEMIE is 1.52 times more volatile than St Galler Kantonalbank. It trades about -0.18 of its total potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.01 per unit of volatility. If you would invest 41,800 in St Galler Kantonalbank on August 29, 2024 and sell it today you would earn a total of 200.00 from holding St Galler Kantonalbank or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
EMS CHEMIE HOLDING AG vs. St Galler Kantonalbank
Performance |
| Timeline |
| EMS CHEMIE HOLDING |
| St Galler Kantonalbank |
EMS CHEMIE and St Galler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMS CHEMIE and St Galler
The main advantage of trading using opposite EMS CHEMIE and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE position performs unexpectedly, St Galler can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in St Galler will offset losses from the drop in St Galler's long position.| EMS CHEMIE vs. Glarner Kantonalbank | EMS CHEMIE vs. Hypothekarbank Lenzburg AG | EMS CHEMIE vs. Liechtensteinische Landesbank AG | EMS CHEMIE vs. Graubuendner Kantonalbank |
| St Galler vs. Banque Cantonale | St Galler vs. Luzerner Kantonalbank AG | St Galler vs. Berner Kantonalbank AG | St Galler vs. Helvetia Holding AG |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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